25 February 2000
Talk of pig-business doom ‘alarmist’
By Robert Harris
TALK of the imminent demise of the UK pig industry is alarmist and unjustified, according to a report released today.
However, painful restructuring is needed to achieve international competitiveness, says author Sean Rickard, head of the executive MBA at Cranfield School of Management.
The strong Pound, which has gained 29% against the Euro since 1996, and over-production have created the most vicious downturn in farm-gate prices in living memory, he said at the launch of A Future for the Pig Industry, the latest in the Lloyds TSB Challenges and Prospects series.
There is some evidence that recovery is now beginning, though he predicted an average net margin loss of 6.80 a pig in 1999/2000.
He believed the Pound had reached its zenith, and said that production was at last falling back.
Nevertheless, he acknowledged the case for short-term aid, to help offset expensive unilateral welfare and feed regulations.
But the single market, EU enlargement and the WTO millennium round all point to increasing competition.
Pig production must be concentrated on bigger, cost-competitive farms, said Mr Rickard, the best of which can already match the performance of US units.
He predicted that, in the next two years, a further 4000 UK holdings will disappear, the same as in the past seven years.
But British pigmeat can only be competitive if the supply chain works together to remove costs and meet fast-changing consumer needs, he maintained.
Producers should form clusters of farms to generate synergies, and form closer relationships with buyers.
This will allow greatly reduced transaction costs, he said.
“The cost of negotiating price, volume, quality and weights each week is am enormous cost burden on the industry, according to one estimate, about 20% of the retail price.
Much better to do it once a year.
“Bound tightly together and committed to common goals, the UK supply chain is potentially world class and capable of exploiting world markets,” said Mr Rickard.